-48 votes

Why is Peter Schiff promoting the Gold Standard?

First off, I oppose the Gold Standard idea and I share Bill Still's understanding of the big risk and here is why. Gold standard is the answer for one world currency and for one world government. The US Constitution gives the responsibility to create money to Congress. Currently this responsibility is in the hands of bankers. There is no problem with paper money. President Lincoln's Congress printed the Greenbacks with which the Civil War was funded, and that worked pretty good (not the war, but the currency). Once Congress, or We The People, regains the power to control the amount of money, then Congress will become more receptive to the will of We The People.

Toward the end of The Money Masters, Bill Still says the following:

Beware of calls to return to the Gold Standard. Why? Simple. Because never before had so much gold been so concentrated outside of American hands and never before had so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund.

I have been examining Bill Still for a while now and the more I study, the more I trust his position on gold - Gold is a good investment, but not good as currency. And this is true from economic and from historical perspectives.

Does anyone know why Peter Schiff keeps pushing for the Gold Standard? I have noticed that Dr. Ron Paul no longer advocates the Gold Standard. Instead, he emphasizes on Congress's responsibility to print the money, not the FED. Plus sometime he mentions alternative currencies, which I do not agree with also, but that's material for another topic.

UPDATE: Thanks to all who spent the time to reply to the question! Some took the liberty to frivolously offend the virtual persona of DreamDreamer, but did not answer the question.

I never claimed to have figured it all out, it was unnecessary to call someone you don't know ignorant, troll, likened to someone who thinks Bible is nonsense, having no common sense, liar, socialist, a few that come to mind, simply based on a question asked.

If we truly believe that Freedom is popular and that Freedom brings people together, we should not beat people up for simply asking a question. How is this any different from any Communist regime?

I truly appreciate every answer to my question. Some answers contain invaluable information, for which I am thankful.



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*GOOD* reference to gold-standard related discussions

So much information is concentrated in the comments.

"Beware of calls to return to

"Beware of calls to return to the Gold Standard. Why? Simple. Because never before had so much gold been so concentrated outside of American hands and never before had so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund."

It is a fair point - if indeed true - that much of the world's gold is concentrated in a few hands. To illustrate, if I own 75% of the world's gold supply and the rest of the world utilizes the remaining 25% as a medium to conduct all their transactions, then I will have great power to manipulate the price of gold. I'll address the problem of price manipulation (on a widespread scale) below. But to further my illustration, look for instance, at allegations of Rothschild manipulation in Europe in the early 19th century.

One Rothschild brother allegedly sold very large quantities of gold on the open market, greatly driving down its price. Free market theory suggests that while this may theoretically be a problem if it was possible to own half the world's gold for instance, doing so would terminate my control of gold, so it would at best be a one-time event. This theory was allegedly subverted, however, by collusion with another European Rothschild brother. The story goes that the second brother(s) bought up all the gold sold by the first brother (beginning to sound like a Chinese fable...). In effect, the brothers conducted a private transaction on a public market to create the illusion of a huge sale of gold. The "sale" effected a large drop in the gold price, and the collusion allowed the brothers to retain the control of their gold, despite the "sale".

Now - why is this bad? Afterall, for every loser in an ensuing gold transaction there was also a winner, right? The problem is that market turmoil causes great economic destruction. Take the hypothetical where the entire world transacts in gold, and so all private contracts are settled in gold. If the price drops very drastically, very quickly, half the businesses take huge losses (those being owed gold) and half the businesses reap huge windfalls (those paying off a debt in gold). In effect, half the world's productive enterprises take huge losses or go bankrupt! - all other things being equal. While the windfall winners might buy up the losers' assets, this is a huge transfer of wealth completely outside the dynamic of mutually agreed exchange of productive effort. Moreover, collaborators tipped off by the gold manipulators could get short gold and reap the windfalls, resulting in a financial oligarchy. This dynamic subverts the free market, as it effects large scale property transfers not based on arms length transactions, but instead on prior knowledge of currency manipulation.

This hypothetical is intended to illustrate the great importance of one of the general characteristics of money: a generally stable value. When commerce in general is dependent upon a relatively stable value of a single medium of exchange, if the capacity to disrupt that value exists, the capacity to greatly disrupt human commerce exists alongside it.

Now - this hypothetical presumes that gold is indeed in the hands of a tiny few. I don't believe this is proven - but let's accept it as a premise. I think Ron Paul's solution of free competition in currencies is still far better than Bill Still's suggestion of fiat currency monopoly in addressing this problem.

First, a national currency will be a big red target for the same financial elite that we are complaining about vis-a-vis gold. History tends to show that human institutions become dominated by a small few. The only lasting partial barrier to institutional oppression I know of has been the U.S. Constitution and its strict limitation on the power of government (partial barrier in that it did not prevent slavery - but I've digressed). A monopoly on fiat paper is an unlimited monetary power and cannot be trusted to any small group, elected or un-elected.

Second, fiat has no intrinsic protection in value. It can be printed ad infinitum. Gold does have some intrinsic protection - even if that protection is hypothetically circumventable (as in the above example). But the solution to manipulable value is NOT to adopt infinitely manipulable value!! That is in effect Bill Still's solution. Solve the manipulation of gold by introducing a currency that can be manipulated without limit. It is oxymoronic.

So, rather than address the alleged problem that Mr. Still identifies with a fiat currency that has the same problem - only far worse - and other problems on top of that, Ron Paul has a solution that actually mitigates or avoids the above problem of gold, while introducing NO additional drawbacks. Obviously, from a conceptual standpoint the Ron Paul plan is far better. But lets look at the details and see if they corroborate the concept:

Free competition in currency greatly reduces the capacity of any one entity to cause economic chaos (which is the goal of the manipulators; basically as a false flag attack to instigate economic change and push the sheep to the wolves). Where gold, silver, copper, platinum, government notes, bank notes, private notes, and barter are all used throughout the world in commerce, manipulation of one money would net only a much smaller degree of economic chaos, and manipulation of all monies would essentially be impossible. This both reduces the effect of manipulation, and MOST importantly, deters it in the first place: If manipulation is unlikely to produce the desired outcome, the manipulators will not risk doing it.

Thus - Bill Still's national money COULD be a viable currency WITHIN a free competition system advocated by Ron Paul. In this case, government currency would be one of many monies that free people could choose to use in their private transactions. Moreover, free competition complies with the moral standard of voluntary association and renunciation of force - each person has full right to control their own property as they see fit, and contract with others as they choose. And are not forced to take a government currency, but can utilize it if doing so is to their benefit.

So not only does free competition in currencies reduce manipulation and mitigate its effects, it also enhances individual liberty. This latter point is not just an ideological tag-line either!! Individual liberty has been shown to be the greatest engine of wealth production in human history. Thus, by enhancing individual liberty and reducing currency distortions, you create an environment in which productive human enterprise and wealth generation can once again explode (without being facilitated by debt accumulation!).

What's more: our economy cannot turn around until these conditions are restored again. While fiat currency might do it if perfectly handled and no rats get in, freely competitive currencies are almost certain to do so.

Republicae's picture

First, most gold is in the

First, most gold is in the hands of individuals, governments and central banks hold about 33%, with estimates of the Rothschilds holding about 5%; second, it really doesn't matter where the gold is because once it is allowed to be money the forces of economic exchange will naturally bear on the distribution within the market.

If look at the history between 1860 and 1879, the Greenback system essentially drove out all commodity monetary metals from the country, even copper cents had to be replaced with stamp cents, but when the resumption of gold was enacted the immediate inflow of metals began. If allowed to be monetized, gold and silver would naturally follow the market demand, supply would meet it to fill that need of commerce.

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Yes you raise good points.

Yes you raise good points. Actual control of gold by a single cabal is much more difficult in practice than in theory. But even if it happens, market forces will bring it back into circulation.

But a question arises - does the market force required to bring gold back into circulation work an injustice on productive market actors? If so, I think it can occur only if people are denied an alternative. And what basis should they be, afterall? In principle, free people should be able to transact in whatever medium they deem best. If people are free to use other media, the impact of any attempted gold manipulation must be greatly diminished on market actors, as compared to a forced monopoly on the acceptance of gold as the only medium of exchange (which is NOT what a gold standard entails, its worth noting). This is where freely competing currencies not only protect gold from transitory manipulation, by mitigating the benefit of doing so, it inoculates individuals from harmful effects if it does occur.

But yes, I think your points are generally correct and provide a good rebuttal of general gold standard concerns.

Republicae's picture

There appears to be the

There appears to be the thought that a free market provides each individual with all the alternatives any individual might wish to have however, the market is essentially the expression of every person as those people make decisions moment by moment for their economic needs and desires. The free market is not an individual Santa Claus, instead it is the fulfillment of the whole host of demands necessary to satisfy the various needs and desires of the people, therefore the individual may or may not have all of his needs and desires met by the market. The idea that a market will be just or injust to every person within the market is more akind to a socialistic dream rather than reality.

The market will choose the most efficient means of execution despite what every individual may or may not need or desire, therefore the questions you raise must fall within the framework of the workings of the entire market, this does not however, render individual choices moot, but those choices can be executed through private contracts which, can always supercede any of the forces that might be exhibited by the market itself. For instance, if you and someone you are doing business with are capable of choosing any medium of exchange you think will satisfy your needs.

Thus, if the market, through the functions of economic efficency chose a particular metal or mineral as market money to the exclusion of all others because of the qualities of that metal or mineral efficently performed the requirements of economic exchange within the market then it will be difficult to make a case that because all other alternatives of money are not made by the market then it is somehow less free or infringes upon the rights of the individual to make other choices disregards the functions of the market itself. If therefore, the market actually chooses a particular form of money over every other form then we can bet that there is an extremely good reason for such a choice; such a choice has nothing whatsoever to do with the actual desire of individuals in the singular, but in the desires of individuals in the plurality as the carry out their daily economic needs and desires within the market and the necessity of efficency within the market as a choice is made that best suits that necessity.

Thus, my contention is that the market, when truly allowed to function freely, will, as it has done in the past, seek the most efficent form of money which, as the market has demonstrated time and time in the past was gold and silver money. It matters not if it is or is not my choice or Dr. Pauls choice or anyone elses; the fact of the matter is that past market behavior can be depended upon as a measure of future market behavior. Market principles follow functional patterns that are relatively consistent in terms of the fundamentals of market functions, thus for a few thousand years it was the choice of the markets, which preceded governments or the intervention of governments, to choose the efficency of gold and silver as money. It wasn't the choice of ment who simply decided that gold and silver would make good money, but it arose as independent market phenomenons throughout the civilized world. Thus, the market, independent of all other factors, found that gold and silver beat all other competitors to become money. It was and will be the pure function of market mechanics following the principles of economic efficency.

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Yes I agree with your

Yes I agree with your comment. Remember though that governments impose restrictions on the freedom to choose a currency, and this is the context in which my points are directed. When I say that people must be free to choose a currency, I mean that governments should not be allowed to impose a currency monopoly, as federal legal tender laws and capital gains taxes have the effect of doing.

Republicae's picture

Oh, I absolutely

Oh, I absolutely agree....government's role in currency should be extremely limited...the Framers of the Constitution were pretty wise in setting such limitations.

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Bill Still's a fuckin

Bill Still's a fuckin ignoramus. Try reading ACTUAL economists like Mises, Hayek, Rothbard, etc. Money Masters was a fucking JOKE of a crapumentary. Makes idiots like Michael Moore look rational.

so what if they have most of the gold?

why would it be embarrassing that most of the gold is outside this country?

let the truth be known. that is no reason to obfuscate what is so.

our country is poorer by comparison because fiat currency has drained us to the bone. and the sooner we return to a competing sound currency, the faster we will return to wealth.

For the record:

So many people talk about the impracticality of using gold for money as if we are going to need handled cases to bring along enough to buy say a hotel or an office building.

You DO realize that a gold based currency would still allow us to keep our wallets and paper money, right?

We would still have paper currency, but backed by gold.

"The Case For Gold" written by RON PAUL

http://www.amazon.com/The-Case-Gold-Ron-Paul/dp/B000XG8T40

Its a book. You might have heard of them.

Get it. Read it.

Actually

I'm against all government regulated currencies whether fiat or hard. I think the free market should decide a suitable medium for trade, through unregulated free market competition. However because the Constitution calls for a national currency (Article one Section 8); gold is just fine with me.

It is an enormous simplification to speak of the American mind. Every American has his own mind.

~Ludwig von Mises

Gold and silver is the only constitutional tender

Gold and silver is the only constitutional tender.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

Article 1 Section 10.

And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

I disagree. Gold is the

I disagree. Gold is the ideal money. Gold has intrinsic value. We simply cannot allow criminals to control the money supply (as they have been doing for the last century). History has shown that they will do what they do best, STEAL!).

There really is nothing better than gold. And so I agree with Peter Schiff. There you have it; no greater authority than Greg Butko himself!

People on this website are

People on this website are obsessed with gold, inflation, and the "immanent" collapse of western civilization. Many here own a lot of physical gold and "know" it will save them from economic collapse in a post-apocalyptic Amerika. In fact, many here are rooting for the collapse of the financial markets. I wouldn't worry too much about the hostility. I received a good bit of last week for my comments in http://www.dailypaul.com/236936/the-markets-are-going-down-d...

God forbid someone points out the flaws in a gold standard. Or points out that inflation is not the problem we face.

My comments from other thread
----------------------------------------------
The people out there holding physical gold long are essentially betting against the continuance of western civilization.

Do you realize how painful a full reboot of the system would be? How it would affect your families and lives? And yet many cheer when bad news comes. It's almost like they enjoy seeing people suffer. There are other ways, like gradually reforming. We should avoid this scenario at all costs.

If the Fed and the ECB allow the deflationary vortex to take hold, you will see a frightening economy. It will be full retard to the downside trading action. I am talking about 300-500 points at a clip, until we settle at around Dow 5,000. Many of you are still fighting inflation. You’ve been so brainwashed by people like Peter Schiff and others that you sincerely believe the dollar is going to zero and we are heading down the path of Zimbabwe.

If you think gold will save you in this horrendous scenario you are mistaken.

Republicae's picture

I dare say that anyone here

I dare say that anyone here will listen and respond to actual valid arguments that oppose gold, but thus far I've not seen any being presented here in the last four years. Even your argument here does little to validate your position does it? Additionally, you will find that no one here, I least I've not read any comments stating that gold will save anyone in a post economic collapse, in fact I think everyone here realizes that the only thing that gold and silver will allow is the ability to provide economic exchange during the period when the government continues to drastically depreciate the fiat paper currency. If a total economic collapse occurs only barter trade goods and skills would serve as mediums of exchange.

I know of no one here thinks that gold money is absolute flawless however, it is far less flawed than any other form of monetary mediums. History tends to support the fact that gold and silver provide the most effective monetary use. The idea you present that people holding gold are betting against western civilization is nothing more than an example of a stretched imagination and doesn't really represent anything remotely approaching reality. One of the primary reasons for holding such physical commodities as gold and silver is simply to remove assets from a more risky form of money into a far safer and confident form of money.

It appears that there will be a creeping collapse rather than an immediate collapse however, there will be intermediate episodes of collapse impacts within the overall creeping collapse. As such, like the decline of other civilizations, there will be those how have prepared themselves, both physically and emotionally for such events. Unfortunately, the time has run out for gradual reforms, the political will simply does not exist within this and other governments, it will not happen, it can't under this current system and under the present public attitudes. All one need do is look at the continuing collapse of the EU, the upcoming trouble in China and then look at the U.S. to see that no one is willing to change the collision course we are all on. The problem is that we are realistically too far down the line within this type of economic system to steer it away from its present course, it is in the process of collapsing before our eyes and there is absolutely nothing that this or other governments can do to reverse that course.

If you look at the last 40 years you will see that the FED has effectively eliminated all hints of deflation, there has been none besides, if you study the history of economic depressions deflation is not as commonly associated with such depressions as we have been lead to believe by the inflationists in the central banks. Besides that, think about what deflation actually is, not what you have been indoctrinated to believe about it. What actually happens to your ability to economically provide for yourself and your family when there is deflation? You have a great deal more economic potency within every monetary unit you hold, so too does every business, so too is the ability to transfer capital into production.

Look at the history of The Great Depression, you will see some countries suffered from deflation, but others did not and yet they still suffered from the economic depression. Now many have been naturally taught that the Great depression was a deflationary event, yet if you look at the actions of the Administration of FDR, you will see that the drastic policies of inflation did nothing to actually alleviate the effects of the economic depression even though it effectively eliminated the deflation that is commonly associated with and is considered the major cause of the depression. So, by 1934 deflation was no longer an issue because of the official force of inflation that was implemented, yet the effects of the depression continued to plague this economy. Thus in this country we are taught and therefore, assume that the depression was the result of deflation, yet even when deflation was crushed by the inflationary policies of FDR, the depression continued absent of deflation. The depression was the result of economic and monetary manipulation and the resulting distortions created by such manipulation.

The fact is that this present economic structure is a complete fabrication of monetary manipulation, it is built upon a policy of continual drastic monetary inflation that forms the entire foundation for the global economy, such systems are not only prone to collapse but they are always bound to collapse, there is no other alternative but eventual devastating collapse. Knowing this fact, it is always prudent to make all necessary preparations for such an eventuality, for the signs of such a collapse are everywhere.

You say we have been brainwashed by people into thinking the dollar will hit a zero purchase value, yet if you think about the drastic depreciation in the purchase value of the dollar in the last 99 years, is it indeed a matter of being brainwashed or simply recognizing the that today it takes nearly $24,000.00 of these drastically depreciated dollars to purchase what $1,000.00 purchased in 1913. That is a matter of reality therefore, what gives you confidence that after a policy that depreciated the currency of this country to less than 4% of its original purchase value that it will simply stop there when the Fed has already embarked on a path of massive inflation that is already having a drastic effect on the remaining purchasing value of the dollar?

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

So happy to see your wisdom

and your guidance back Where have you been?

Colchester, New London County, Connecticut

Republicae's picture

Thank you...I've been out of

Thank you...I've been out of the country for several months, but I'm back at least for a while.

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

I own gold but I am not

I own gold but I am not "rooting for the collapse of financial markets." I buy house insurance but I am not hoping that my house will burn down.

There have been many threads

There have been many threads started weekly cheering on bad news and the markets dropping. Not saying you are involved with said people.

SteveMT's picture

I don't believe that anyone wants civilization to collapse.

The fiat currency systems of the world are flawed because they are based on debt, not value. I want the fiat currency systems of the world to collapse in the least disruptive way possible. I hope that people will wake-up during this process and that it all happens in time to get Ron Paul into the White House.

If we start today it will

If we start today it will take decades. Hitting the reset button is palatable to no one. Hopefully the Fed can keep easing long enough to keep us out of the deflationary vortex while we get our deficit together. And of course legalizing competing currencies would be a good thing to.

SteveMT's picture

The longer the Fed postpones this transition ....

to sound money, the worse the collapse will be for the world. It could very well cause us to go into another Dark Age.

thank you Steve

I wanted to respond to him, but just sat there staring at my keyboard thinking "where do I begin?" and then felt too exhausted to try...

It looks like a big job to straighten that mess out.

SteveMT's picture

And thanks to you also, NY4RP

The biggest companies/monopolies hate competition. This includes the Fed. Competing currencies by the States with sound, value-based currency would wipe them out. No one would hold dollars any longer, and the Fed would crawl back into its cave.

You are without top hat sir.

You are without top hat sir.

you're smoking some good stuff man

61% of all new US treasuries in 2011 were bought up by the fed.

of course the last thing they want is deflation, it widens the deficit and decreases revenue.

I don't think you have any idea of what you are talking about. You bandy this word about "inflation" like you truly understand it. I don't think you fully understand who the winners and losers are going to be as they inflate the currency. I'm willing to bet that you will not be on the favorable side of that outcome. do you work in a sector where your wages will keep pace with the true CPI? even if you are a provider of basic goods and services such as a farmer, you may find yourself without a market as the people will not be able to purchase what you produce. That is one of the real effects of mass or hyperinflation, which is what we are on an express path to.

I look at your posts and it screams "look at me, I know something"...

I don't pretend to know everything, but at least I have the basics down. see my post below.

FEDERAL USURPATION BY

FEDERAL USURPATION BY FRANKLIN PIERCE 1908

...Everyone acquainted with the Civil War who has carefully watched events since that time must have seen a gradually accelerated movement of the centralization of government commencing at that time. This was brought about by the government's issue of legal-tender notes, by the creation of our national banking system,and especially by the protective tariff then instituted and since continued. Hamilton, in his masterly statement on the currency, said that bills of credit and paper emissions were expressly forbidden to the states by our present Constitution, and that the spirit of that prohibition extended to the National Government. Notwithstanding that it was the intent of the framers of the Constitution to prohibit the National Government, as well as the states, from making paper money legal tender, Congress, in 1862, declared such paper lawful money and a legal tender in payment of public and private debts, and authorized the issue of $150,000,000 in notes, our present greenbacks. Never before had a statute of the United States made anything but gold and silver coin a legal tender in payment of debts. The United States Supreme Court, at a later date, in a suit where these notes had been tendered and rejected in payment of a debt existing before the war, held that the act making them legal tender was unconstitutional; but afterwards, when the court was differently constituted, reversed its own decision. Without discussing further at the present time the constitutionality of this issue, all will acknowledge that the exercise of the power has made the government all powerful in banking and commercial affairs. When a government issues the money of the country and has the tempting power to increase the amount for use in aiding private bankers, such power makes the government almost omnipotent.

13 No servant can serve two masters; for either he shall hate the one, and love the other, or else he shall lean to the one, and despise the other. Ye cannot serve God and riches. - Luke 16

Republicae's picture

That is an excellent book

That is an excellent book btw...

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Gold is real

Stop looking at the big picture. That's how the planners suck you in. The American tradition is based on the rights of the individual. When the desires of the group trump the rights of the individual...there's a problem.

Gold
I can save for the future of my children using gold.
I can trust my retirement savings if I use gold.
It's difficult to tax.
My future is in my hands.

Paper
I can't control it, I can't trust it.
The value of my savings can be stolen.
The cost of my childrens education inflated.
It is easily controlled.

Making it legal to use money you can trust won't get rid of the rich or the poor. However when the law of the land respects you as an individual, protects your right to truly own your land, protects your right to save for a better future, helps you keep what you earn....it sounds like the dream that all people in every nation aspire too. It is the sound of the American Dream.

Ron Paul simply says, keep the Fed, legalize competing currencies. For the reasons you see above...that will be the end of the Fed. He's never changed, he's always said legalize competing currencies.